September 1, 2017

2 contrasting views on demonetisation

Demonetization, Modi's biggest move, is total bust

When India’s prime minister announced last November that 86 per cent of India’s currency would be worthless in hours, he presented the decree as a well-thought-out measure to attack cash “hoarded by anti-national and anti-social elements.” We were led to believe that honest taxpayers would line up to return their high-value currency notes, but these “anti-national and anti-social elements” would be unable to do so without raising suspicion. 

In the words of Finance Minister Arun Jaitley: “Obviously people who have used cash for crime purposes are not foolhardy enough to try and risk and bring the cash back into the system because there will be questions asked.” 

Well, if that’s true, then apparently nobody in India is dishonest -- because, according to the Reserve Bank of India’s long-delayed accounting, more than 99 percent of the cash in circulation has been returned. This isn’t surprising. Read more at http://economictimes.indiatimes.com/news/economy/indicators/view-demonetization-modis-biggest-move-is-total-bust/articleshow/60319345.cms

Those who slam Modi's note ban are completely missing these points
Critics of demonetisation make two major arguments against it. One, that it was expensive, ill-timed, unnecessary. Second, that it did not root out black money and the move has failed since all the money has come back. There is one major counter argument to this. The Modi government has taken a number of initiatives to root out black money.

Bear in mind that money doesn't become white just because it is deposited in banks. The money leaves an address, a trail. The depositors become known to bankers and the income tax department. Suppose businessman A has rupees one crore of illegal money stashed away in his house. He is forced to deposit it in his account but this does not mean he has escaped scrutiny.

Read more at: http://economictimes.indiatimes.com/news/politics-and-nation/here-is-how-demonetisation-is-a-big-success/articleshow/60315591.cms

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